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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended July 1, 2000
Commission File Number 0-16960
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THE GENLYTE GROUP INCORPORATED
AND SUBSIDIARIES
4360 BROWNSBORO ROAD
LOUISVILLE, KY 40207
(502) 893-4600
Incorporated in Delaware I.R.S. Employer
Identification No. 22-2584333
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]
THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK AS OF AUGUST 9,
2000 WAS 13,439,425.
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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JULY 1, 2000
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Income for the three
months ended July 1, 2000 and July 3, 1999......................1
Consolidated Statements of Income for the six
months ended July 1, 2000 and July 3, 1999......................2
Consolidated Balance Sheets as of
July 1, 2000 and December 31, 1999..............................3
Consolidated Statements of Cash Flows for the six
months ended July 1, 2000 and July 3, 1999......................4
Notes to Consolidated Interim Financial Statements.................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS......................9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..........................12
Signatures.........................................................13
Exhibit 27: Financial Data Schedule................................14
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JULY 1, 2000 AND JULY 3, 1999
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
2000 1999
----------- -----------
Net sales $ 251,336 $ 243,645
Cost of sales 167,193 164,175
----------- -----------
Gross profit 84,143 79,470
Selling and administrative expenses 62,205 58,426
----------- -----------
Operating profit 21,938 21,044
Interest expense, net 683 1,075
Minority interest 6,388 6,181
----------- -----------
Income before income taxes 14,867 13,788
Income tax provision 6,246 5,928
----------- -----------
Net income $ 8,621 $ 7,860
=========== ===========
Earnings per share
Basic $ 0.64 $ 0.57
Diluted $ 0.63 $ 0.57
The accompanying notes are an integral part of these consolidated financial
statements.
1
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JULY 1, 2000 AND JULY 3, 1999
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
2000 1999
----------- -----------
Net sales $ 495,991 $ 481,121
Cost of sales 330,502 324,273
----------- -----------
Gross profit 165,489 156,848
Selling and administrative expenses 123,623 116,892
----------- -----------
Operating profit 41,866 39,956
Interest expense, net 1,540 2,271
Minority interest 12,265 11,695
----------- -----------
Income before income taxes 28,061 25,990
Income tax provision 11,786 11,175
----------- -----------
Net income $ 16,275 $ 14,815
=========== ===========
Earnings per share
Basic $ 1.20 $ 1.07
Diluted $ 1.18 $ 1.07
The accompanying notes are an integral part of these consolidated financial
statements.
2
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JULY 1, 2000 AND DECEMBER 31, 1999
(000'S OMITTED)
(Unaudited)
7/1/2000 12/31/99
----------- -----------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 36,931 $ 22,660
Accounts receivable, less allowance for doubtful
accounts of $12,902 and $14,910, respectively 159,186 155,428
Inventories:
Raw materials and supplies 49,664 46,717
Work in process 15,315 14,027
Finished goods 73,682 75,297
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Total inventories 138,661 136,041
Other current assets 29,589 29,938
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Total current assets 364,367 344,067
Plant and equipment, at cost 331,500 322,867
Less: accumulated depreciation and amortization 225,712 217,878
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Net plant and equipment 105,788 104,989
Cost in excess of net assets of acquired businesses 113,459 111,426
Other assets 10,446 15,228
----------- -----------
TOTAL ASSETS $ 594,060 $ 575,710
=========== ===========
LIABILITIES & STOCKHOLDERS' INVESTMENT:
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt $ 1,605 $ 1,647
Accounts payable 90,578 86,717
Accrued expenses 67,280 80,001
----------- -----------
Total current liabilities 159,463 168,365
Long-term debt 60,765 53,964
Deferred income taxes 31,767 31,797
Minority interest 105,898 98,940
Other liabilities 20,715 20,102
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Total liabilities 378,608 373,168
STOCKHOLDERS' INVESTMENT:
Common stock 136 137
Additional paid-in capital 15,264 17,761
Retained earnings 169,582 153,307
Accumulated other comprehensive income 30,470 31,337
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Total stockholders' investment 215,452 202,542
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TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $ 594,060 $ 575,710
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
3
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 1, 2000 AND JULY 3, 1999
(000'S OMITTED)
(Unaudited)
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 16,275 $ 14,815
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,642 12,159
Loss from disposal of plant and equipment 1,187 299
Changes in assets and liabilities, net of effect
of acquisitions:
Accounts receivable (3,758) (24,138)
Inventories (2,620) (2,377)
Other current assets 349 (160)
Other assets 601 (2,013)
Accounts payable and accrued expenses (8,860) (2,410)
Deferred income taxes (30) (479)
Minority interest 6,958 7,586
Other liabilities 613 60
Minimum pension liability -- 230
All other, net 495 (726)
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Net cash provided by operating activities 24,852 2,846
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired -- (31,026)
Purchases of plant and equipment (13,975) (10,435)
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Net cash used in investing activities (13,975) (41,461)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term borrowings -- (1,795)
Proceeds from long-term debt 7,600 36,160
Reductions in long-term debt (841) (69)
Purchases of treasury stock (3,289) (253)
Stock options exercised 791 1,307
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Net cash provided by financing activities 4,261 35,350
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Effect of exchange rate changes on cash and
cash equivalents (867) 1,258
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Net increase (decrease) in cash and cash equivalents 14,271 (2,007)
Cash and cash equivalents at beginning of period 22,660 8,555
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Cash and cash equivalents at end of period $ 36,931 $ 6,548
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,277 $ 1,918
Income taxes $ 13,174 $ 10,397
The accompanying notes are an integral part of these consolidated financial
statements.
4
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS OF JULY 1, 2000
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1. BASIS OF PRESENTATION
Throughout this Form 10-Q, the term "Company" as used herein refers to
The Genlyte Group Incorporated, including the consolidation of The
Genlyte Group Incorporated and all majority-owned subsidiaries. The
term "Genlyte" as used herein refers only to The Genlyte Group
Incorporated.
The financial information presented is unaudited (except that as of
December 31, 1999), however, such information reflects all adjustments,
consisting solely of normal recurring adjustments, which are, in the
opinion of management, necessary for a fair statement of results for
the interim periods. The financial information has been prepared in
accordance with rules and regulations of the Securities and Exchange
Commission for Form 10-Q. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. For further information refer
to the consolidated financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December
31, 1999.
The results of operations for the six-month period ended July 1, 2000
are not necessarily indicative of the results to be expected for the
full year.
2. USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from these estimates.
3. COMPREHENSIVE INCOME
For the three months ended July 1, 2000 and July 3, 1999 total
comprehensive income was $7,843 and $8,468, respectively. For the six
months ended July 1, 2000 and July 3, 1999 total comprehensive income
was $15,408 and $15,889, respectively.
5
4. EARNINGS PER SHARE
The calculation of the average common shares outstanding assuming
dilution for the three months ended July 1, 2000 and July 3, 1999
follows:
2000 1999
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Average common shares outstanding 13,566 13,798
Incremental common shares issuable:
Stock option plans 99 24
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Average common shares outstanding assuming
dilution 13,665 13,822
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The calculation of the average common shares outstanding assuming
dilution for the six months ended July 1, 2000 and July 3, 1999
follows:
2000 1999
------ ------
Average common shares outstanding 13,641 13,794
Incremental common shares issuable:
Stock option plans 121 11
------ ------
Average common shares outstanding assuming
dilution 13,762 13,805
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5. INVESTMENT IN FIBRE LIGHT AND ACQUISITION OF LEDALITE
On May 10, 1999, the Company acquired a 2% interest (with rights to
acquire an additional 6%) in Fibre Light International, based in
Burleigh Heads, Queensland, Australia. Fibre Light International is in
the business of commercializing fiber optic lighting technology. The
two companies then formed a jointly owned limited liability company
named Fibre Light U.S. LLC ("Fibre Light"), of which the Company owns
80%. Fibre Light manufactures, markets, and sells fiber optic lighting
systems in the U.S.
On June 30, 1999, the Company acquired the assets and liabilities of
privately held Ledalite Architectural Products Inc. ("Ledalite"),
located in Vancouver, Canada. Ledalite designs, manufactures, and sells
architectural linear lighting systems for offices, schools,
transportation facilities, and other commercial buildings. The purchase
prices of these acquisitions totaled $31,469 (including costs of
acquisition), consisting of approximately $8.5 million in cash payments
and approximately $23 million in borrowings.
The Ledalite acquisition has been accounted for using the purchase
method of accounting. The excess of the purchase price over the fair
market value of net assets acquired of $27,068 is being amortized on a
straight-line basis over 30 years. The purchase agreement provides for
additional payments contingent upon future operating results of the
acquired entity. The additional consideration, if and when paid, will
be recorded as additional cost in excess of net assets of acquired
businesses.
6
The operating results of Fibre Light and Ledalite have been included in
the Company's consolidated financial statements since the dates of
acquisition. On an unaudited pro forma basis, assuming these
acquisitions had occurred at the beginning of 1999, the Company's
results would have been:
Three Months Ended Six Months Ended
--------------------- ---------------------
7/1/2000 7/3/1999 7/1/2000 7/3/1999
Actual Pro Forma Actual Pro Forma
-------- -------- -------- --------
Net sales $251,336 $249,939 $495,991 $493,145
Net income 8,621 7,619 16,275 14,479
Earnings per share $ .63 $ .55 $ 1.18 $ 1.05
The pro forma results do not purport to state exactly what the
Company's results of operations would have been had the acquisitions in
fact been consummated as of the assumed date and for the periods
presented, nor are they necessarily indicative of future consolidated
results.
6. SEGMENT REPORTING
The Company's reportable operating segments include the Commercial
Segment, the Residential Segment, and the Industrial and Other Segment.
Inter-segment sales are eliminated in consolidation and therefore not
presented in the table below. For the three months ended July 1, 2000
and July 3, 1999:
Industrial
Commercial Residential and Other Total
---------- ----------- ---------- -----
2000
Net sales $180,718 $ 35,502 $ 35,116 $ 251,336
Operating profit $ 16,287 $ 2,492 $ 3,159 $ 21,938
1999
Net sales $175,050 $ 35,275 $ 33,320 $ 243,645
Operating profit $ 15,906 $ 2,104 $ 3,034 $ 21,044
For the six months ended July 1, 2000 and July 3, 1999:
Industrial
Commercial Residential and Other Total
---------- ----------- ---------- -----
2000
Net sales $354,857 $ 70,016 $ 71,118 $ 495,991
Operating profit $ 30,617 $ 4,742 $ 6,507 $ 41,866
1999
Net sales $343,563 $ 70,185 $ 67,373 $ 481,121
Operating profit $ 30,495 $ 3,490 $ 5,971 $ 39,956
7
The Company has operations throughout North America. Information about
the Company's operations by geographical area for the three months
ended July 1, 2000 and July 3, 1999 follows. Foreign balances represent
activity in Canadian operations.
United States Foreign Total
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2000
Net sales $218,636 $ 32,700 $ 251,336
Operating profit $ 18,274 $ 3,664 $ 21,938
1999
Net sales $214,932 $ 28,713 $ 243,645
Operating profit $ 18,884 $ 2,160 $ 21,044
Information about the Company's operations by geographical area for the
six months ended July 1, 2000 and July 3, 1999 follows:
United States Foreign Total
------------- ------- -----
2000
Net sales $433,230 $ 62,761 $ 495,991
Operating profit $ 36,049 $ 5,817 $ 41,866
1999
Net sales $424,357 $ 56,764 $ 481,121
Operating profit $ 35,873 $ 4,083 $ 39,956
No material changes have occurred in total assets since December 31,
1999.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
COMPARISON OF SECOND QUARTER 2000 TO SECOND QUARTER 1999
Net sales for the second quarter of 2000 were $251.3 million, an increase of 3.2
percent from the second quarter of 1999. Net income for the second quarter of
2000 was $8,621,000 ($.63 per share), a 9.7 percent increase over the second
quarter 1999 net income of $7,860,000 ($.57 per share). Sales and earnings for
the second quarter of 2000 included Ledalite Architectural Products, which was
purchased at the end of June 1999. Without Ledalite, sales for the second
quarter of 2000 would have been essentially unchanged compared to the second
quarter of 1999, while net income would have increased 10.7 percent over the
second quarter of 1999.
Cost of sales for the second quarter of 2000 was 66.5 percent of net sales,
compared to 67.4 percent in the second quarter of 1999. This decrease is
primarily attributed to continuing raw material cost savings resulting from the
combination of Genlyte and Thomas Lighting, as well as cost savings realized
from plant consolidations during 1999. Selling and administrative expenses
increased to 24.7 percent of sales in the second quarter of 2000 from 24.0
percent in the second quarter of 1999 because of additional costs for new
product launches and because certain divisions that have experienced reduced
sales have not reduced selling and administrative expenses proportionately.
Interest expense, net was $683,000 in the second quarter of 2000, compared to
$1,075,000 in the second quarter of 1999, a decrease of 36 percent. The net
decrease is the result of both a reduction in debt, reducing interest expense,
and an increase in cash, increasing interest income.
The effective tax rate was 42.0 percent for the second quarter of 2000 compared
to 43.0 percent for the second quarter of 1999.
COMPARISON OF FIRST SIX MONTHS 2000 TO FIRST SIX MONTHS 1999
Net sales for the first six months of 2000 were $496.0 million, an increase of
3.1 percent from the first six months of 1999. Net income for the first six
months of 2000 was $16,275,000 ($1.18 per share), a 9.9 percent increase over
1999 net income of $14,815,000 ($1.07 per share) for the comparable period.
Sales and earnings for the first six months of 2000 included Ledalite
Architectural Products, which was purchased at the end of June 1999. Without
Ledalite, sales for the first six months of 2000 would have been essentially
unchanged compared to the first six months of 1999, while net income would have
increased 11.1 percent over the first six months of 1999.
Cost of sales for the first six months of 2000 was 66.6 percent of net sales,
compared to 67.4 percent in the first six months of 1999. This decrease is
primarily attributed to continuing raw material cost savings resulting from the
combination of Genlyte and Thomas Lighting, as well as cost savings realized
from plant consolidations during 1999. Selling and administrative expenses
increased to 24.9 percent of sales in the first six months of 2000 from 24.3
percent in the first six months of 1999 because of additional costs for new
product launches and because certain divisions that have experienced reduced
sales have not reduced selling and administrative expenses proportionately.
9
Interest expense, net was $1,540,000 in the first six months of 2000, compared
to $2,271,000 in the first six months of 1999, a decrease of 32 percent. The net
decrease is the result of both a reduction in debt, reducing interest expense,
and an increase in cash, increasing interest income.
The effective tax rate was 42.0 percent for the first six months of 2000
compared to 43.0 percent for the first six months of 1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased to $36.9 million at July 1, 2000, compared
to $22.7 million at December 31, 1999. Total debt increased to $62.4 million at
July 1, 2000, compared to $55.6 million at December 31, 1999. The increase in
borrowings was mainly due to the addition of a $7.6 million industrial revenue
bond to finance a plant expansion and paint line at one of our divisions.
Working capital at July 1, 2000 was $204.9 million, compared to $175.7 million
at December 31, 1999. This increase was primarily due to the increase in cash as
explained in the next paragraph, increases in accounts receivable and inventory,
and a decrease in accrued expenses. Due to seasonal tendencies of the Company's
business, accounts receivable and inventory increased during the first six
months of 2000, although these increases were much less than the comparable
period of the last two years. Accrued expenses decreased primarily because of
payments made in the first quarter on liabilities that get accrued over a full
year and paid at one time early the following year.
Cash provided by operating activities during the first six months of 2000 was
$24.9 million, compared to cash provided by operating activities of $2.8 million
in the first six months last year. The primary reason for this increase was that
accounts receivable only increased $3.8 million in 2000, while it increased
$24.1 million last year. Accounts receivable increased to an unusually high
amount in 1999 because of collection problems at certain divisions that have
been improved in 2000. Cash used in investing activities during the first six
months of 2000 was $14.0 million, all for normal plant and equipment purchases.
Cash used in investing activities in 1999 was $41.5 million, including $31.0
million to purchase Ledalite. Cash provided by financing activities during the
first six months of 2000 was $4.3 million, primarily from the increased debt
referenced above, less purchases of treasury stock. Cash provided by financing
activities in 1999 was $35.4 million, primarily because of increased debt to
finance the Ledalite acquisition and to fund the accounts receivable increase.
Management believes that currently available cash and borrowing facilities,
combined with internally generated funds, should be sufficient to fund capital
expenditures as well as any increase in working capital required to accommodate
business needs in the foreseeable future.
The Company has a $150 million revolving credit facility that matures in August
2003. There were no borrowings under this facility at July 1, 2000. The
Company's long-term debt at July 1, 2000 consisted of $19.3 million in Canadian
dollar notes from the Ledalite acquisition, $22.3 million payable to Thomas
Industries Inc., $18.1 million in industrial revenue bonds, and $1.1 million in
capital leases and other.
10
FORWARD-LOOKING STATEMENTS
The statements in this document with respect to future results, future
expectations, and plans for future activities may be regarded as forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, and actual results may differ materially from those currently expected.
The Company makes no commitment to disclose any revision to forward-looking
statements, or any facts, events or circumstances after the date hereof that may
bear upon forward-looking statements.
11
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K: None
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Genlyte has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
THE GENLYTE GROUP INCORPORATED
(Registrant)
Date: August 14, 2000 /s/ LARRY K. POWERS
-------------------------------------
Larry K. Powers
Chairman, President & CEO
Date: August 14, 2000 /s/ WILLIAM G. FERKO
-------------------------------------
William G. Ferko
V. P. Finance - CFO & Treasurer
13